Overview of Mobile Payment: Technologies and Security

Introduction

The growth in wireless technology increases the number of mobile device users and gives pace to the rapid development of e-commerce conducted with these devices. The new type of e-commerce transactions, conducted through mobile devices using wireless telecommunications network and other wired e-commerce technologies, is called mobile commerce, increasingly known as mobile e-commerce or m-commerce. Mobile commerce enables a new mode of information exchange and purchases, and it presents an unexplored domain. To customers, it represents convenience; merchants associate it with a huge earning potential; service providers view it as a large unexplored market; governments look it as a viable and highly productive connection with their constituents. In short, mobile commerce promises many more alluring market opportunities than traditional e-commerce. M-Commerce is an area arising from the combination of electronic commerce with emerging mobile and pervasive computing technology.

The most important application of mobile Commerce is Mobile payments. These services makes a mobile device to act as a business tool replacing bank, ATM, and credit cards by letting a user conduct financial transactions with mobile money. A mobile user attempts to purchase goods or services from a business or service provider, which then contacts a trusted third party, the wireless service provider, or a financial institution to authenticate the user and amount of purchase. Once approved, a mobile payment can be made and the purchase is completed. The corresponding funds can then be withdrawn from user’s m-wallet, charged to user’s phone bill, or subtracted from user’s bank account. Alternatively, the user could pay using mobile money provided to him by another user or a third party mobile money provider. Mobile money can be moved freely among users either by using a local area wireless network or by using the wireless service provider’s network. Several groups are working on mobile payments, including PayCircle that is established by HP, Lucent, Oracle, Sun, and Siemens. Mobile financial transactions require a strong level of security support. Although, security features have been added in mobile middleware such as WAP for financial applications, wireless PKI (Public Key Infrastructure), a system to manage keys and certificates, is used to authenticate and obtain digital signatures from mobile users. The payment system is an application responsible for increase in competitive advantage in organizations. Researchers are interestingly working in the area of mobile payments as it is multidisciplinary in nature and works in collaboration with different areas like telecommunications, wireless networking, mobile computing and security.